Sellers target cyber sprawl

Amazon.com dipped below 30; InfoSpace loses 28%

By

BambiFrancisco

NEW YORK (CBS.MW) -- Net stocks were blitzed Thursday, with Amazon.com and InfoSpace at the center of the selling, as investors showed their unwillingness to buy companies that need to spend recklessly to grow revenue.

Amazon.com (AMZN) slid 4 11/16, or 13 percent, to 31 3/8. But it could have been worse. Shares dipped below 30, touching 29 3/4 earlier in the session. After the close Wednesday, Amazon posted quarterly results that beat estimates on the bottom line, but fell short of top-line projections. Shares had cracked through the 30-mark earlier in the session.

Amazon had to pare down on its spending to appease investors. But as a result of those cutbacks, the online retailer failed to keep revenue momentum up to snuff.

“The shortfall in revenue was due to lower customer acquisition growth at 2.5 million which resulted from lower marketing than we estimated,” said Anthony Noto, an analyst at Goldman Sachs.

Meanwhile, InfoSpace (INSP) dropped 13 1/4, or 28 percent, to 34 1/2, its lows of the session. Triggering the selling was the company’s surprise announcement late Wednesday. And it wasn’t quarterly results that came in above expectations.

“InfoSpace stock may be down short-term due to the premium paid for Go2Net, leading to continued stock volatility,” said Michael Graham, an analyst at Robertson Stephens. “We suspect the next big move in the stock will come when revenue from the wireless rollouts becomes big, which we estimate will be in the fourth quarter.” See full story.

No longer a field of gold

But it wasn’t just shares of Amazon and InfoSpace that were trampled upon on the Net plantation.

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